Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ligeland First Quarter 2025 earnings. All lines have been placed on you to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press start followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Melanie Herrmann, Executive Director of Investor Relations. Please go ahead.

Good morning, everyone, and welcome to Ligian's first quarter 2025 earnings call.

During the call today, we will review the financial results we released earlier today

and provide commentary on our partner pipeline and business development activity, followed by a question and answer session. Before we get started, I would like to point out that we will be discussing non-GAAP results, which excludes certain items such as stock-based compensation, amortization of intangible assets, amortization or impairment of financial assets, losses from derivative assets, and expenses incurred to incubate the PELTOS business, amongst others. I encourage you to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP measures, which can be found in today's release available on our website. We believe these suggested measures provide valuable insight into our core operating performance, both historically and going forward. Our earnings release and a link to today's webcast can be found in the Investor Relations section of our website at ligand.com. With me on call today, our CEO, Todd Davis, Chief Financial Officer, Tavo Espinoza, Rich Baxter, Senior Vice President of Investment Operations, and Vice President of Strategic Planning and Investment Analytics, Lauren Hay. This call is being recorded and the audio portion will be archived in the investor section of our website. On today's call, we will make forward-looking statements regarding our financial results and other matters related to the company's business. Please refer to the Safe Harbor Statement related to these forward-looking statements, which are subject to risks and uncertainties. We remind you that actual events or results may differ materially from those projected or discussed, and that all forward-looking statements are based upon current available information. LIGAN assumes no obligation to update these statements. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that LIGAN files with the Securities and Exchange Commission or SEC. That can be found on LIGAN's website at LIGAN.com or on the SEC's website at SEC.gov. With that, I will now turn the call over to Todd.

Todd Johnson Thank you, Melanie. Good morning, everyone, and thank you for joining our call. I'm pleased to share that we have had a strong start to 2025, setting the stage for what we believe will be another solid year of growth and execution for Ligand. Over the past 15 months, we have experienced incredible momentum across our royalty portfolio, driven by 10 new investments and four FDA approvals. As we have mentioned in previous calls, we believe that Merck's Capvaxiv, Verona's Otuver, Trevere's Phil Spari, Recordadiz Karziba, and Pilthos' Zilsubmi will be significant contributors to our royalty revenue growth in 2025 and beyond. We also continue to build a strong pipeline of phase two and phase three development stage assets, including DeFi, which we added to our portfolio in February of this year following our investment with Castle Creek Biosciences. This deal is exemplary of our approach where we look for quality teams combined with quality assets that are aiming to solve for areas of significant unmet clinical need. Our portfolio today consists of more than 90 assets and is diversified across various stages of clinical development and therapeutic areas. A few weeks ago, we executed a complex strategic transaction to merge our subsidiary, Pelthos Therapeutics, with Channel Therapeutics, while securing substantial financial backing. This investment will accelerate the commercialization of Zelsugme, an FDA-approved prescription therapy for Molescum contagiosum, for which we are entitled to a 13% royalty. This accomplishment builds on our successful track record of identifying highly differentiated assets and executing customized transactions to maximize their value through equity and royalty rights. Investments such as this distinguish Ligand's business model and value creation strategy. Slide three summarizes our financial and portfolio achievements in the first quarter. We grew top-line revenue by 46 percent over the same period last year and grew adjusted EPS by 11 percent. Royalty revenue in the first quarter increased 44 percent over the same period in 2024. FlyGant has over $200 million in cash and investments, no debt, and access to a $125 million revolving credit facility, which we can upsize to $200 million. We invested nearly $250 million of capital in the last 15 months across 10 investments and continue to see robust activity in our business development pipeline. Pavel will provide more detail on our portfolio later on the call, but I wanted to touch on a few of our key commercial stage assets. Verona Pharma's O2Vair continues to have a strong launch trajectory, reporting net sales of 71 million in the first quarter of 2025, far exceeding the analyst consensus estimates, and we're seeing that many of Verona's analysts are increasing their peak sales estimates for O2Vair. Trevere submitted an SNDA for Filspari and FSGS in the first quarter of 2025, And if approved, Filspari could become the first and only FDA-approved treatment for FSGS, a rare kidney condition and leading cause of kidney failure. Additionally, Trevere plans to submit an amendment to the REMS SNDA that is currently under review for modification of the current liver monitoring requirements. The FDA indicated that this amendment is not expected to impact the review timeline, and the company continues to expect a REMS modification PDUFA target action date of August 28th. We have also been very pleased with the launch trajectory of Merck's CapVax Eve. Merck reported net sales of $107 million this quarter, nearly double consensus estimates. We are excited about the trajectory of these programs and the upcoming growth drivers in 2025. Before I move on to the next slide, I wanted to touch on the current biopharmaceutical financing environment. With fewer IPOs and a more difficult landscape for private fundraising, it has become challenging for biotech companies to raise the capital they need to develop their pipelines and launch new drugs. Royalty financing is another tool in the financing toolkit for these companies, so it is no surprise that we're seeing a significant increase in demand for this type of financing. While we continue to be highly selective in the investments we pursue, we believe this trend represents a positive tailwind for Ligand as we move further into 2025. Furthermore, there's been significant activity regarding restructuring and personnel changes in government institutions, including the FDA. While these changes may cause disruption and uncertainty in the short term, we have heard many encouraging comments from the new FDA leadership, which infers intent to reduce unnecessary regulation while keeping the key oversight requirements in place. Specific comments have been made about ways to get medications for severe and rare diseases through the regulatory process more quickly. This would be very good for patients in dire need, and that orientation is potentially beneficial to our development stage portfolio and investment strategy as well. Turning to slide four, I'd like to discuss a few of our recent investments and current investment pipeline. This quarter we saw record-setting origination activity. Our team has leveraged their extensive experience across therapeutic categories and technologies to identify the highest value opportunities. We have 38 active investment opportunities under review, representing an even balance between accretive and pre-approval transactions. We closed two new investments, including Castle Creek and the final O2Vair and Venture Buyout, and executed a transaction with Channel Therapeutics. I would note that three deals exemplified three different investment approaches from our talented team. The first was a royalty monetization. The second was a project financing, often referred to as synthetic royalty. And the third was our special situations approach, which in this case involved the acquisition, incubation, and setup, followed by the financing and spin-out of the former Novan asset, Zyl Sudmi. I feel extremely positive about the performance of our strategic planning and investment teams and what they have been able to accomplish in just a few short months. Moving to slide five, I would like to remind investors of our strategic differentiation. First is our focus. The guiding objective is to deliver profitable and compounding growth. From that guiding principle emerges our strategy and all investment decisions. Second is our existing asset base. Our diversified and growing portfolio of royalty assets generate consistent and predictable revenues. We acquire or generate these royalty interests in late-stage development assets and commercial assets where there is superior risk-reward. Third is our team. Our highly qualified team brings decades of royalty investing, clinical, operational, regulatory, and deal structuring experience, as well as strong origination networks throughout the industry. This enables us to originate and close royalty investments that are targeted on areas of high clinical value with relatively low risk. we are outcome oriented and continue to execute on our strategy of acquiring high growth low opex assets there is sizable demand and low supply for royalty capital in the life sciences industry which allows us to invest selectively as we offer a differentiated capital solution for our partners our team works thoroughly to source diligence and negotiate investments with customized structures to create proprietary opportunities. Our 2024 acquisition of Epyron is a prime example of this approach. We can achieve this while maintaining a low level of operating expenses and high operating margins. Overall, royalty capital is a very small percentage of the total capital invested in life sciences today. We believe our model is differentiated, scalable, and offers immense growth potential for years to come. Turning to slide six, I would like to look ahead to 2029 and discuss our five-year royalty receipts outlook. As we shared during our most recent investor and analyst day, we believe our long-term royalty revenue growth is on pace to meet or exceed the 22% compound annual growth rate outlined at our investor day in December of 2024. The existing portfolio alone supports royalty receipts CAGR of 18%. Future investments should add at least 4% to this, with potential upside on top of the current outlook. As I mentioned earlier, our business development team is constantly identifying attractive new investment opportunities, and we anticipate another productive year on the investment front. In conclusion, I feel very good about all that we've accomplished since we began executing on our new streamlined and focused strategy in the fourth quarter of 2022. We are highly optimistic about our future prospects. I'll now turn it over to Rich Baxter for an update on our recently announced PELTHOS strategic transaction.

Thank you, Todd. I'm pleased to share an important update on our progress with Peltos Therapeutics and the Zelsubmi asset. Let me begin by providing a brief history of how we got here. As many of you know, our royalty portfolio included rights to Novan's lead asset, SB206, which is now commercially known as Zelsubmi. In late 2023, just months before the scheduled January 2024 PDUFA date, Novan filed for bankruptcy. Recognizing the strategic importance of the asset, we acted swiftly. We completely re-underwrote the position, undertook new diligence, checked our assumptions, and provided dip financing, restructured the company, and ultimately secured the product, the platform technology, and the company itself. Following FDA approval in early 2024, we established Peltos Therapeutics as a wholly-owned subsidiary to lead the commercial launch of Zelsubme. Our primary goal was to attract external capital, recruit an experienced management team, and accelerate patient access, all while continuing to generate value for Ligand shareholders. That brings me to the strategic transaction we announced in April. PELTHOS will combine with Channel Therapeutics in a deal that raises $50 million in equity capital and creates a newly public biopharma company focused on launching Zelsubme. Under the terms of the agreement, Channel will acquire 100% of Peltos, change its name to Peltos Therapeutics, Inc., and list on the New York Stock Exchange under the ticker PTHS. Ligand has committed $18 million to the combined entity, and Merchanson, a Toronto-based investor group, is contributing $32 million, resulting in a $50 million capital raise. On a post-money, fully diluted basis, Ligand will initially own approximately 55% of the new company. We chose Channel not only for its capital commitment, but also for its early-stage pain programs, which we believe offer strategic synergies with Zelsubme. Looking ahead, Peltos is well-positioned to pursue additional commercial-stage assets. Importantly, we structured the transaction to preserve meaningful equity ownership in Zelsubmi, as we believe the market has yet to fully recognize its potential. Combined with our 13% royalty, Ligand shareholders stand to benefit from significant long-term value creation. We expect the merger to close between June 30th and August 30th, pending SEC review. In the meantime, we are building out the commercial team and preparing for a U.S. launch this summer. Please turn to slide nine. Let's take a closer look at the condition we're treating, molluscum contagiosum. This is a highly contagious pox virus and one of the most common skin infections seen by dermatologists and pediatricians. It affects an estimated 16.7 million people in the United States and spreads easily through contact or contaminated items like towels, toys, and furniture. Children are particularly vulnerable, so are immunocompromised adults, and people who are sexually active with others who have a molluscum contagiosum infection. Clinically, molluscum presents as raised, flesh-colored bumps on the skin, appearing on the face, trunk, genitals, and even behind the knees. Patients may experience discomfort, secondary infections, and significant social stigma. Please turn to slide 10. Our market research underscored how disruptive this disease can be. We heard stories of children being excluded from daycare, school, and sports, and of siblings spreading the infection to each other. The emotional toll is real, especially for those affected for long periods of time, months if not years. Currently, the standard of care is often watch and wait. Most pediatricians don't treat molluscoma actively, whether due to lack of training, limited tools, or concerns about treatment safety. Eventually, many families are referred to dermatologists who may use cryotherapy or blistering agents, both painful and requiring multiple visits. Across our research and advisory boards, the message has been consistent. The market is ready for a safe, effective, and at-home treatment option. That treatment is Zelsuvme. Please turn to slide 11. Zelsutme is the first and only FDA-approved at-home prescription therapy for molluscum contagiosum. Approved for patients as young as 12 months, it is safe, effective, and designed for at-home use by parents, caregivers, and patients themselves. That home-use distinction is powerful. Providers are eager for solutions that don't rely on in-office techniques. We believe Zelsubmi will become the first-line therapy by reducing lesion counts, minimizing the need for procedures, and lowering the frequency of office visits. We're excited to bring this therapy to pediatricians, dermatologists, and their patients. Please turn to slide 12. From Ligand's perspective, Zelsubmi represents a compelling investment. It targets a large, underserved market and stands as the only FDA-approved treatment of its kind. It is backed by a robust intellectual property portfolio, including 14 Orange Book-listed patents, as well as significant manufacturing know-how and trade secrets that extend those barriers to the entry beyond 2037. We estimate that if just 100,000 of the 16.7 million affected patients received two prescriptions over a 12-week course, Zelsuvme would become a highly successful product for both Ligand and Peltos. We have assembled the right team to execute and achieve that outcome. This transaction also exemplifies the kind of complex value-creating strategies and investments that Ligand specializes in, particularly in distressed or special situations. We believe these opportunities will become more prevalent in today's market environment. In closing, we're proud to have executed this merger and financing and look forward to delivering Zelsugme to patients, caregivers, and providers. They deserve a new, effective, and accessible therapy to manage molluscums safely from their own. And with that, I'll turn it over to Tavo

for the financial update. Thank you. Thank you, Rich. I'm pleased to report a strong start to the year, with the first quarter results that position as well to achieve both our 2025 financial guidance and our longer-term growth objectives. Let me begin with a few highlights. Total revenue for the quarter was just over $45 million, driven by 44% growth in royalty revenue, which totaled $27.5 million dollars. Adjusted earnings per share came in at $1.33. As Todd mentioned, we continue to maintain a strong financial position. We ended the quarter with $209 million in cash and investments after deploying $50 million in cash toward our Phase 3 DeFi asset in partnership with Castle Creek. Including our available credit facility, we have over $400 million in deployable capital. Slide 16 provides a closer look at the numbers. Total revenue for Q1 2025 was $45 million, up from $31 million in the same period last year. That's a 46% increase. Growth was broad-based across all three revenue lines, but royalties drove the largest contribution. Key drivers of that royalty growth included strong performance from Virona's O2Vair, Trevear's Rilsfari, Rekordatis Carzeva, and Merck's Capvaxas. We also saw increased Capsosal sales, primarily due to Gilead's restocking of Veclari, their COVID-19 antiviral. Let me expand briefly on a few of these programs. We're especially encouraged by Virona's U.S. launch of O2Vair for COPD. They reported Q1 2025 sales of $71.3 million, almost doubled their Q4 results. As a reminder, we now earn a 3% royalty on O2Vair following our strategic investment of roughly $20 million over the last year to acquire an additional 1% royalty interest. At our investor day last December, we projected that O2Vair would reach $1.2 billion in sales by 2029, implying annual royalty revenue of over $35 million to ligand. Some analysts now forecast hitting that milestone as early as 2027. O2VAR is shaping up to be a major long-term growth driver for us, and we look forward to updating our long-term projections later this year. Turning to FOSPARI, Trevia reported first-quarter U.S. sales of $56 million, beating consensus and representing more than 180% year-over-year growth and 13% sequential growth. Ligant earns a 9% royalty on FOSPARI sales, including those generated in Europe via CSLV4. We were pleased to see the EU's recent full approval of Filspari, and we're closely watching two near-term catalysts, the potential REMS modification with an August 28th PDUFA target action date, and an FDA update on the SMDA for FSGS, which could receive approval this fall. With a potential expansion into FSGS, SOSPARI could become our largest royalty-generating asset, approaching $50 million in annualized royalties by mid-2026. Merck's Capvaxiv also posted strong results, reporting $107 million in Q1 sales. That's more than doubled the prior quarter and well ahead of expectations. We did see some offset from Kaipralis. Amgen reported Q1 sales of $324 million for Kyprolis, down 14% year-over-year, primarily due to competitive pressures. On the Captisol front, we recorded $13.5 million in material sales this quarter compared to $9.2 million in Q1 2024. This growth was driven by timing of shipments and higher demand from Gilead for Beclery. We expect a more even shipment cadence over the remaining quarters. Turning to operating expenses, combined R&D and G&A increased this quarter primarily due to a one-time $44 million charge related to our royalty financing agreement with Castle Creek. This supports the Phase III clinical study of DeFi and is accounted for under ASC 730-20 research and development arrangements. Additional increases reflect headcount growth and continued investments in the Peltos business. For the quarter, G&A and R&D expenses were $19 million and $50 million, respectively, compared to $11 million and $6 million in Q1 2024. Gap net loss for the quarter was $42.5 million, or $2.21 per share, compared to net income of $86.1 million, or $4.75 per diluted share in the prior year. The variance is largely due to the gain we recorded last year from our investment in Viking Therapeutics versus the R&D charge we booked this quarter. On a non-GAAP basis, core adjusted net income for Q1 2025 was $26.6 million or $1.33 per share. That's up from $21.8 million or $1.20 per share in Q1 2024, driven primarily by top-line growth. Turning to the balance sheet, we ended the quarter with $209 million in cash and short-term investments, including $24 million of Viking stock. We believe this level of liquidity, combined with our expected cash flow, positions us well to fund our investment plans for the foreseeable future. Finally, we are reaffirming our full year 2025 financial guidance. We continue to expect royalty revenue between $135 and $140 million, capital sales between $35 and $40 million dollars contract revenue between 10 and 20 million dollars total revenue between 180 and 200 million dollars and core adjusted EPS between 6 and 6 dollars and 25 cents we are of course continuing to monitor legislative and geopolitical developments based on what we know today if tariffs were to be expanded more broadly into pharmaceutical products we do not expect a material impact to our captasol business or to ligand more broadly. That concludes my remarks. I'll now turn

the call back to Todd for closing comments. Thank you, Tavo. To sum up, we're off to a great start in 2025, and we're excited about the trajectory of the recently approved programs, as well as our robust development stage pipeline. Additionally, our investment capabilities offer us the ability to materially grow our asset portfolio. Our diversified portfolio, including our major commercial royalty-generating programs and the late-stage pipeline, form the foundation of our growing success. On its own, the commercial portfolio should drive growth in the mid-teens to the early 2030s. When you add in our development-stage portfolio, including but not limited to Pauvela's QTorin MLM asset, Trevere's FSGS SNDA submission, and our recent investment in DeFi with Castle Creek, we continue to expect EPS growth of over 20%. Through investing, we will continue to add to our commercial and late-stage clinical assets as this portfolio provides us with substantial cash flow to reinvest in new high-value enhancing royalty opportunities. We are well positioned to execute against our goals in 2025 and deliver attractive growth and shareholder returns over the long term. Thank you everyone for joining us for today's earnings call. I will now pass it back to the operator and open it up for questions. At this time I would

like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Doug Mem with RBC Capital Markets. Your line is open.

Thanks very much. My question has to do with the, and you touched on this, the current environment for the space, and one might almost say that you have an embarrassment of riches here in terms of identifying and potentially bringing in royalties to project financing or special situations. Would you say that you're seeing even more special situations these days? And if so, what the implications for the company may be? Thank you.

Thanks, Doug. That's a good question. There is an increasing number of special situations. Much of that is driven by difficult financing markets for biotech companies. And I think the implications for these companies in the industry in general is recaps, mergers, the sale of some of these companies, and it provides a good opportunity set for us too. A key core thesis of our strategy is that, and this was part of the whole Novan and Zilsoumi view, is that sometimes really good assets get trapped in bad situations. And that's constantly what we're scouring for. So for us, that is a good event. But of course, overall, we need a healthy market for biotech going forward, as does everybody else on both the finance and industry side. But long term, I think that we will have that. There's going to be a lot of changes. We're going through significant short-term disruption due to policy changes. But again, the orientation of this company or of this administration, which views biotech as one of the strategic industries it's supporting, is to deregulate and try to get good medicines to patients more quickly if possible. So that probably bodes well for us. Ultimately, I think your best defense in all of these situations is to make sure that the medicines you're focused on are really adding significant clinical value, especially if you're investing at the development stage, because you don't have a label yet. Your forecasts obviously have more assumptions in them, And so, you really have to be solving significant clinical problems. And then ultimately, when and if you do get the approval, you're going to have a much better conversation with both the payers and the regulators.

Excellent. Thank you.

Your next question comes from the line of Matt Hewitt with Craig Holland. Your line is open.

Good morning and congratulations on the strong start to the year. first up, there's news that's broken here over the last 24 hours. I realize it's pretty recent, but with the potential for most favored nation's status for drug pricing, it sounds like it would just be, and this is uncertain, Medicaid or Medicare, but what do you think that that would do to how your partners kind of look at where they launch, when they launch, those types of things, you know, what would be the potential impact from that, if any? Yeah, that's a great

question, Matt. And although this news just broke this morning, you know, there has been, I think, you know, dislocation in the pricing markets based on different policies across the globe. And for, you know, a couple decades at least, if not more, the U.S. has paid premiums for medicines compared to other countries. And as you know, this administration is also very focused on fair trade. And they also have a reputation for starting out with really big asks and then trying to get to some deal-making resolution of some sort. So I expect that that's the direction that this announcement will go as well. and ultimately though I think that the U.S. is the main market most of the partners we are partnering with not all because Carzeba is launched in Europe obviously and across the globe really but not in the U.S. but most of our partners are focused first on the U.S. market and then follow on in the other markets but I think you know in terms of expectations there's going to be a period of significant short-term disruption as this is sorted out, and trade policies around pharmaceuticals are negotiated. But long-term, I think it's probably a good thing.

That's helpful. And then maybe as a follow-up question, given, and you noted this at a couple different times in the prepared remarks even, but given some of the disruption that we're seeing and the challenges that potential partners are having on the funding side. As you look at your investment opportunities, has the sizing changed at all, or are you still kind of looking kind of as, you know, those bite-size, you know, $10, $20 million type investments and spreading your strong balance sheet over multiple shots on goal, or would you consider something larger? Thank you.

Thanks, Matt. I think for the general audience here, I would just say that we're trying to create a very diversified portfolio. And so the general guidance that we're following now at our current market cap and our current portfolio size is that we believe that $50 million is about the most we want to invest in a binary risk situation. And so that's about the most we're going to do in a binary situation. That was the size of our investment at Castle Creek. We syndicated in the other $25 million for that reason. And that's just a portfolio math. We're trying to create a diversified portfolio. Not everything will work. And we think that the math really works well at that size. Where we will upsize is in significantly de-risk situations, and the best recent example we have of that is a pyron that was already a launched product that had been on the market in Europe and the rest of the world for over three years, had significantly entrenched, become significantly entrenched in clinical practice, and the clinical safety and efficacy profile was very well known in a broad population with very high clinical need. So really about as de-risk as you can get. By the way, the marketer here is very good, Rector.id. So we felt really good about that. That was a $100 million deal. And so we will upsize on really de-risk situations that do not have binary risk. And then long-term, as our portfolio grows, proportionately, we will move up our diversification limits, consistent with our view on the portfolio math.

That's very helpful. Thank you.

Your next question comes from the line of Trevor Allred with Oppenheimer. Your line is open.

Hey, good morning, guys. Just had a couple quick questions. Is there anything to say on CARZEVA expectations and the activities Rick Roddy is doing there to expand use? And can you also talk to where these loss come continue? Some patients are most primarily seen. Is it pediatric derms or is it pediatricians? Or what was the, I guess, referral patterns that might happen there?

Thank you, Trevor. I'm going to ask Lauren Hay, who's on the call with us, to address the first question regarding CARZEVA. as she's tracking that from a portfolio management perspective. And then I'll have Rich Baxter answer your question on moles from Contagio. Lauren? Sure. Thanks for the question.

So, as you may be aware, Rekordati has recently started disclosing Carceba sales in their three year projection presentation a couple weeks ago. That showed impressive growth of 23% between 2023 in 2024. And then they also increased the peak sales guidance for the oncology franchise. They bumped that up from 250 to 300 million euros to 350. They're continuing to invest in geographic expansion, which is driving that upsized peak year estimate. They launched in South Korea last year. Latin American launch is expected this year. And then, as you're probably aware, they are continuing to pursue approval in the U.S., and the next planned FDA interaction on that front is mid-year, so we'll be looking forward to an update there. Those are some of the shorter-term growth drivers, and then in terms of medium to longer-term, they're investing in expanding the use of Curseva to induction therapy, both in frontline and in the relapse refractory setting. And then the longer term, they've recently announced a program to expand the use of Carceba to Ewing sarcoma patients, which would, if approved, provide pretty dramatic revenue upside in the longer term. So I think we continue to be very optimistic about Carceba and Recordati's commercial success with this product. I'll turn it to Rich for your second

question. Thanks, Lauren. Molluscum contagiosum is primarily seen initially by pediatricians. As the condition worsens, they get referred to pediatric dermatologists for children and dermatologists for adults. So initially, the target market is going to...the sweet spot of the target market are pediatric dermatologists, and dermatologists and pediatricians will be critical for the product going forward.

Great.

Thanks. Your next question comes from the line of Annabelle Samimi with Stufo. Your line is open.

To my question, congratulations on a good quarter. Just following on the biopharma environment and the number of opportunities that you have, I appreciate your desire to remain relatively diversified. Any thoughts as to the investment capacity you're willing to put out every year? I think you've talked about 150 to 200 total capital allocations for the year. Any thought to increasing that and taking advantage of the environment? That's the first question. Then the second is regarding nitrosil. Now that you have PELTOS off and still suit me about to launch, can you dive into how you might leverage the Nitrosil platform to new products or licensing, and what are your next plans for that technology? Thanks.

Sure. Thanks, Annabelle.

Sure. On investment capacity, I think there's probably a pretty good chance we invest at above our normal pace this year, just given the environment, the number of good opportunities we're seeing. As was mentioned in the earnings call, about half of what we're looking at is currently commercial, but still is offering significant returns above what we would consider normal market returns.

So those we are interested in as well.

And that could result in a higher deployment level. That said, we're going to observe our diversification limits on the deal size. and it takes just as much work to do a $5 million deal as it does a $75 million deal and get it right. So we have certain bandwidth restrictions as does any investment team, and we're going to go at the pace that we're capable of. But everybody here is working pretty hard given the opportunity set right now. So that's what I'd expect on the investment pace. And in terms of the NitroCell platform, that's a great question. I think that I would just comment that this is a special situation. Sometimes the special situations require more work and therefore consumes more bandwidth, and therefore there can be more opportunity costs with them. And that's the case with Novan. So the reason that you do that is because of potential outsized returns. And on the single lead asset, Zelsumi, which is now approved, on the overall investment there, we're going to make, I think, very nice equity-like returns on a single asset. But we do own the intellectual property across the board in multiple potential therapies. And we've got about three different therapies that the team is looking at now. So, Dr. Karen Reeves is looking at that with her team and analyzing what we think will be the best opportunities. I suspect what we will do there is look for partners to develop those as well. And I think it's early, but the opportunity set there is pretty robust. I expect, you know, my expectation is we'll end up with at least two commercial products out of this, but hopefully three or four.

Your next question comes from the line of John Vonderlusten with Zax. Your line is open.

Great. Thank you. And another question on Peltos. Is the initial launch timing for Brazil FoodMe dependent on when the deal is able to close the channel or is it independent of that?

It's fairly independent at this point, but I think the Venn diagram overlaps pretty nicely We're expecting, as Rich said, to close, the merger to close. at least the two standard deviation normal ranges between june 30th and august 30th and we already have the skeleton of the team we even have some regional sales managers in place they're all preparing for the launch the manufacturing team has been in place and is manufacturing commercial supplies so the next step will be to hire sales reps we're going to to have significant feedback from the SEC in the next two to three weeks I think after our initial submission that's going to tell us a lot about the length of the pathway and we'll probably dial in a little bit uh our rate of hiring on the sales reps as we get that information um so that's that's uh the plan currently John um I think the financing is secured uh the merger target along with the required number of votes is secured. So really, for the most part, this is a matter of timing, which we don't totally control with the SEC. Okay. And then looking at Fulspari,

you had mentioned that it had shifted from conditional marketing approval standard to marketing approval in Europe. And does that change any reimbursement or access for the product?

I'll let Lauren Hay comment on that. Yeah, I think, John, it's a great question. I think

you know, we're expecting to see kind of continued momentum from Trevere's partner CSL v4. You know, I think probably doesn't dramatically change the trajectory. They're continuing to, you know, secure country by country reimbursement approvals and further, you know, invest in the launch. So we'll continue to see, I think, growth in the coming quarters from them and, you know, certainly an encouraging development for CSL v4 and Trevere as well.

Okay. And last one for Talbo on revenue trends for the year. Should we expect to see something similar to last year where a little bit lower in the first quarter and then a jump in the second quarter and kind of slowly trend up? And I know contract revenue played somewhat of a role there, but ignoring that line, how do we think it's going to, I guess, the cadence, so to speak, of revenues for this year, for the rest of this year.

Yeah, pretty – thanks, John. Yeah, pretty balanced cadence on the captosol. I mean, you see that we're reiterating that, and so you can do the math pretty straight line from here on to the end of the year on captosol. And then just given the nature of some of the royalty arrangements with the tiered royalty rates with Kipralis and a couple of the others, you should expect to see kind of a gradual uptrend. as is typical on the royalty line. Great. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may not disconnect.